If it is arthritis in the knee it will probably not go away completely with the correct saddle height and fore and aft positioning, but it will help. Fore and aft is not quite as critical when you are riding with flat pedals cause you can move your foot around on the pedal fore and aft and probably do without knowing it. But you should try to keep your feet with the ball of your foot over the spindle area of the pedal and try to keep your foot as neutral as possible. Neutral means where it feels comfortable, some people toe out a little some in, but it should be fairly straight forward with a little change for your specific anatomy.
Here are some tips I can also give you to help the pain in the knee - I have arthritis in my knee and my back so I have two different things that cause pain in my knee. But, make sure that your hubby is stretching well, and especially keeping stretched the IT band area. This is the band of tendon that runs from your hip to your knee. This can get tight and pull on the knee and cause more pain. My knee always hurts more in the Spring when I start riding more cause my IT gets tight. The more I get used to riding, the better it gets and the more I stretch the better it gets. Also, I change my saddle height an infintessimal bit in the winter, Spring and then when I am riding more in the summer. In the winter you wear more clothes that put you farther from your pedals so you need to drop your saddle an 1/8 or 1/4 of an inch during winter. When you become more flexible as you are riding more in the Spring and you are taking off more clothes, then you can raise your saddle up that little 1/8 or 1/4 inch.
Hope that helps.
spoke